tv Squawk Box CNBC December 13, 2012 6:00am-9:00am EST
central america. it's thursday, december 13th, 2012. and what is so special about 12-13-12? it's ben bernanke's birthday. happy birthday, ben. "squawk box" begins right now. good morning and welcome back to south carolina here on cnbc. i'm andrew ross sorkin along with joe kernen. becky is off today. dino kosof, he's going to have a lot to talk about when it comes to what mr. bernanke just said. later in the program, we'll talk to pimco's kneneal ashkari. a surprise from ben bernanke, linking unemployment
to monetary policy. rates will be staying where they are right now, which is close to zero, of course. until at the very least the jobless rate falls to 6.5%. we can only cross our fingers wherefore when that might be. ben bernanke says these changes will make the central bank more transparent adding they can only help the markets. the central bank ramped up its asset purchase program adding $40 billion to its $40 billion a month purchases of mortgage-backed bonds. he spoke about the objectives during wednesday's news conference. >> the asset purchases and the rate increases have different objectives. the asset purchases are about creating near term momentum in the economy, trying to strengthen growth and job creation in the near term. and the increases in the federal funds rate are about objectives.
>> on that note, let's get dino's take on the latest move. >> grpg month. >> for you, this was expected. >> the 85 billion was expected. the move to the thresholds, that is, i think, we expected it was happened. it was signaled, but a lot of people thought it would happen later, maybe that it would happen sort of by march. >> so is it going to be different? >> i think the number was -- it was interesting. so let's take each one of them. the inflation rate 2.5%. let's remember, in january, they set up an inflation target of 2% for the headline pce, as it's called. so now they've already moved it, they've moved the goal post a little bit. they were saying our target was 2%. now they're saying maybe they can live with 2.5%. they're saying maybe these new thresholds will be reasonable ones. they can move them up or down as
their own analysis dictates. on the unemployment side, charlie evans first pushed this and he pushed it at 7% and it's now gone to 6.5%. even the big proponents of this have had these targets moved. now, let's step back. what did this replace? this replaced a time horizon commitment. the fed had said we're going to be accommodative until at least mid 2015. so then it moved and they said, well, we're going to be accommodative until we get these inflation and unemployment numbers to these levels. is this a really big change? i'm not sure that it is. i mean -- >> your gamble is we could be at 6.5% unemployment by mid 2016. >> i think, you know, the point is that the bigger issue is what are the asset pure chases? at what pace are these asset
purchases and how long will they do them? as long as they are not committing themselves and not tying themselves to anything, all they're saying is they have been tying themselves to a date, now they're tying themselves to a number. we're going to be in here for a long time. >> we've got qe now. we already knew we had qe. 85 billion, qe, the market was down 2 points yesterday on qe perpetual. now we know we're going to go to get the 6.5% before we stop. if we're in a new normal, like pimco says and like ryan hart, we're never getting to 6.5%. so this is qe perpetual for as long as it takes. the bang foreour buck we're getting with all of these accommodative moves is getting slimmer and slimmer for market participants. is this not worrisome to you that 85 billion a month doesn't move the markets and now we don't know when it's going to end? >> i thought this was going to go on for a had very long time.
that's why when he said time horizon in 2015 but than he said -- why do you think it's the same thing, then? >> but why didn't wall street main line this yesterday? why wasn't this the fix they needed? >> because they had spec'd it. the fed had already told you. enough people said that they were going to -- >> we're in permanent -- you and no now, this is a remarkable thing. a couple of years ago when they first did this, it was extraordinary. it was an emergency measure. now, it is the standard. >> we've got a weak, crippled economy and i can't believe we didn't get much fed support because we have no fiscal support. >> we have no fiscal support. fiscal is going to be going the other way. and you're talking about $1 trillion of asset purchases now is the annual run rate spop that is now baked into the marketplace. it's billed -- it's baked into asset prices and now it's -- you know, what people are going to be betting on over time -- is it
increased or decreased over time? >> all right. have we not been lulled into -- you know, anything bernanke does now doesn't shock us or surprise us. isn't this extraordinary? >> you know, a few years ago, there were all kinds of things that i would v never happened. now if people ask me if such and such is possible, i say anything is possible. >> one of the things that i did think immediately yesterday was ben bernanke may not have this job in two years, right? people talk about that. he may decide he doesn't want to do it. >> he was asked about it. >> but he may ultimately be locked in. he may be locking in his successor and his successor after that into this type of thinking and this type of program. how hard is it to get out of this later? >> it is going to be extremely hard to get out of this, regardless of who the leader is, because, again, it is now -- you know, this is no longer an extraordinary measure. you did this during the emergency and then it's time to get out. now we're -- you know, we're in a bit of a quasi equilibrium
here and this is how we're running monetary policy now. so to now being doing a regime shift out of this, it is going to be very, very difficult and it's going to be time consuming. it will be risky and the markets aren't going to like it when when it comes. >> what does it say about the underlying fundamental strength of our economy and whether we have long-term structural problems being glossed over? >> we have a lot of long-term structural issues to confront. and the fed is, you know, the impact on the economy has not been strong. we have seen 2% growth since the recovery started. markets have reacted more than the economy. and now the effect on markets is leading to -- >> to think of a -- you know, we always have to come up with met fors like this is. >> slogan? >> no. >> i'm worried about rise above
because when we get to the debt ceiling, you can't use rise above. you have to stay below. >> stay below. >> so we're going to have to change it. no, but i think it might be a big boat that's got a bunch of holes and the water is coming in and you have the fed putting water out as fast as it can. instead of fixing the holes -- >> but the problem is, if they can't fix the holes, right? >> so because of our inability to -- >> because congress fit the structure stuff. and there are demographic issues that are, you know, not under anybody's control. but, you know, we do have this problem with the labor force participation going down, we have people exiting the labor force because they're discouraged and in some places it's the -- >> if i were running this country, i would be taking bernanke to dinner every night and getting him whatever he wants. because it's really masking the
inability for us to govern. and the economy wouldn't even be doing 2% if it wasn't for the fed at this point. i think that's -- and that is -- >> politically if you're bernanke, the bronc thing to do or maybe the right thing to do for the country is to stop and say you guys over there figure it out. >> multiply by times 12 by three? >> the value is going to be $4 trillion in another year. that's about 25% of gdp. sounds like a lot. boj has more, ecb mass more. swiss national bank, way more. so i mean, there are no limits that we're approaching. so i wouldn't be shocked if a year from now we're here and we're talking about 4 trillion unemployment to a number that's even bigger. >> let's check on, you know, the markets which are like that boat. even after all this, we've got nothing. we're just trying to tread water and we're indicated down about 9 points on the dow. after it was all said and done
yesterday, we're supposed to open higher. >> yes. >> i don't know what you said later on in your conference. did you do it? >> ray dalio made comments latter in the day. >> de? >> about corporate bonts bonds and he thinks this whole thing at some point is going to implode. >> steve galio was there. >> yeah. it was a pretty interesting day. but i think his comments moved some people, too. >> did we broadcast ray dalion? >> i don't know if we broadcast him live. we should grab some clips and play them on squawk. >> dino, did you have something? >> i think you're on track in terms of the economy. the economy is weak. >> should i be wishing things just bottomed on their own so that we could start policing -- >> i mean, you know, what will be great would be a surge in productivity. you know, a surge of demands
externally. >> i can't get here any earlier. we're here at 3:30 in the morning. >> you know, can this economy be more productive? >> go to bed at 8:00. >> can that happen? can we get a surge of external demand? and those things are unlikely or can't be predicted. >> andrew got in earlier today than ever. >> i did. i was coming from the concert last night. no, i wasn't. let's check out the situation in crude today. 86. we're used to that now, too. it's like, okay, 86 is fine. the ten-year, and this, when we used to go and see greenspan down in washington, he said everything else you have on your ticker, i need to see the 10 year. i need to see that every morning. nothing has happened in the ten year for the last -- i don't know. it's just not as interesting as it used to be to watch. when it's manipulated, it's not that interesting. >> one of the things about qe is
that it's volatility. and you have seen implied vols down in all asset classes, including bonds. >> because things normally are volatile, that just shows us once again this is not letting things -- letting the chips fall where they may. >> yeah. i think it's baked into the cake. >> but i think he's on to something. the fact that the fed is there, the fact that the fed is trying to get ahead of the fiscal cliff and we've got these big bond buying programs. and the last time, remember, in august of 2011 when we had the last showdown, what happened? bonds rallied. >> and you said you want this to be fixed. you almost need the markets to be more volatile than they are. >> that's one of the theories that people have thrown out there is that the politicians won't do something until the markets forced them to do it. >> let's get to kelly evans,
talk to the global markets. kelly, i want to tie this to you, tie this to your purview over there. every year, i get a tie from van ek and i got -- the first one was bernanke, a picture of him in a helicopter. and then i got one with draghi and a can and euro signs. yesterday, it's back to bernanke with the helicopter, but it's alternating with draghi with euros because now he is out helicopter draghi. so we're all in concert in a world that can't seem to exist without liquidity. we wasn't do anything based on our feds. it's not a great world to be in. >> well, ben bernanke has given a great analogy. it's funny you bring that up today because it's partly what we're seeing as we look over to the italian and spanish debt
auctions that haven't wrapped up their fund rt for the end of the year. it's still a weak session for european equities. just in fact last couple of minutes, we've had news from the euro group where after last night, it agreed on a common supervisor, the ecb under margo draghi. this morning, they agreed finally on the disbursement of aid to greece. some says it removed uncertainty. other investors, not so sure. i wanted to show you the italian curve, italy and spanl wrapping up their fund-raising for the year. their auctions weren't all of that huge, but we are seeing yields fall, prices rise across the board as investors did show up. if we flip over to spain in particular, we can take a look at the three-year over here. a bid to cover ratio of 4.8%. one indication certainly of the kind of indications there are where the ecb is expected to be
the most active if and when these countries have to access their bailout programs. now we're seeing prices in spain sell off a little bit. the ten-year, just under 5.4% is the level there. for the longer dated papers, investors are a little bit more wary. now, that news coming out of the euro group meeting, i wanted to show you the euro/dollar as we wrap up today's global market support. it's still down .1%, 1.3056. that would tell you that the resolution is largely priced in. now as focus moves into the start of next year, a couple of the key questions will be how much mario draghi follows ben bernan bernanke's caps, maybe even cutting into positive territory. expect to hear plenty more about that in the weeks to come. but for now, some resolution means this is front and center
for these fiscal cliffs. back over to you guys. >> kelly, have your bookers called yet? do you know? have you tried to -- it may be better for you to call him directly instead of a booker. can you get him on? don't you want to interview him? he's very charming, too. >> look, maybe, joe, if you help us out. if we all ask nicely enough we can have him come on and explain why he is or isn't trying to dodge higher french tax rates. he, though, has been one of the more outspoke nn france about high tax rates overtime and even warning sarkozy about raising taxes. i'm sure if anyone, he's happy to make this an issue. >> did you see his net worth, supposedly? 120 million and i don't know whether that's euros or dollars. he's made a lot of movies. he's very charming in the airplane, if you remember. >> joe, are you skulking at $120 million of in the net worth? am i what?
>> can you scoffing, saying that 120 million is extraordinarily low? >> no. she's hearing the audio from the audio room. >> no, that wasn't me. that was a sound track of a french guy that we ran long ago on the show. no, i -- god bless him. for an actor to accrue that much i think is great. and i like him. i like his movies. i think he ought to get going and order salad a few more times, but -- >> didn't he have a problem in an airplane? >> i think that was him, yeah. the aisles were clogged. thanks, kelly. yeah, you're right. i hate the when that happens. it's been more than a month sips the election. next we'll have the post election nnz "wall street journal" results. find out how the american people about washington, the cliff
cliff and as we head to action, we'll check out the price of gold. this is america. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place!
reynolds wolf, i answer to everything. and then at home i hear all different kinds of names together. >> they're both actor names that people make up to be cool. either way, it's good. it's republicynolds wolf. >> let's show you what's happening out west. we have spotty showers along the coast and snow showers along the coast. still scattered snow showers in parts of the -- let's see, parts of the mountains in california. not only portions of the san gabrielle mountains, but also the mountains in sierra, nevada. it's going to cause some backups in places. san diego, you might have a few delays there. in vegas, miami and new york, minor to no delays whatsoever. that's the good news. very quickly, let's talk about the east coast. so far, so good. scattered showers on parts of the coast, but new york city expecting a high of 45 today. mostly sunny in the ohio valley,
into parts of the northeast. still scattered showers in parts of south florida getting very close to the record, the yearly record of rainfall in miami. as we wrap it up, from fargo and on the other side of the river, expect snow showers. still balmy, beautiful showers in dallas. mostly sunny and 65. back to you. >> reynolds, thanks so much. thanks for flag along. >> you bet, guys. americans want action when it comes to the fiscal cliff. john, you'll give us some of the highlights, but with what we've told them about what will happen if we go over, i guess we shouldn't be too shocked that they don't want to go over. we've basically said there could be a recession, there could be millions of job losses and everything else. so i guess we probably shouldn't be surprised by that. >> no, we shouldn't. they've gotten the message. they've absorbed it. we've asked in the survey how serious a problem is the fiscal cliff? and you get 68% of the people
saying it's a very serious problem, which tells you something when you're talking about something abstract like tax and budget politics which people don't ordinarily pay attention to. they've gotten it. but what we're seeing in this poll, joe, is the after glow of the election. typically when presidents get re-elected, the partisan fighting stops. their numbers rise. the president's approval rating 53%. when you ask, who do you trust to handle the fiscal cliff, it shows how the president has the upper hand. 38% say they trust president obama. that's twice as many as trust speaker boehner, although the 38%, of course, is under 50%. >> 38%. oh, man. but when you look at the potential solutions, does obama have a mandate? we asked that question. you see very big numbers, 68% says he has a mandate to cut taxes for people who earn less than 250k. 65% say he has a mandate to raise taxes on the wealthy while
cutting spending. both elements are important. and when you ask about eliminating the bush tax cuts for people who make more than 250,000, 59% say he has a mandate to do that. so the president clearly has the whip hand in the negotiations, but, of course, members of congress don't respond to national polls. they're fought elected nationally like the president. they're responding to their districtes and that's why we have a different number to solve. >> i saw a number on nightly last night that was sadly low. we try to make something out of it. who would you blame if we go over? and it was 19 to 24. that was weird, wasn't it? that's where -- >> well, i think in some respects -- >> 19 we plame i think the president and 24% would blame -- that's not very -- that's like 24%? that's all you can get for that? you can't even make a story out of that, can you? >> well, i think there is a
certain -- on both your houses if that happens. but look, it is clear, president obama has the high side of public opinion in a macro level. >> but, john, to campaign individual districts? for me, that bothers me. i understand ginning up public support, but beaches and campaigns, it's govern, govern, govern, stay in washington, be with these people. govern. getting people to -- i'm getting e-mail every day. i got one from -- i don't know, from his people, joe, call your congressman, call your congressman. and i finally wrote back on one of them. you're still campaigning? would you please start governing? and they sent something back to me, if you have comment on policy, snd it to this meal. but i finally sent it back and
said would you please just -- you're in. you're in for four more years. you don't need the cross-section of the united states behind you. as you say, i've got to pen. you won re-election. now govern, now lead. >> but, joe, from the white house point of view, which they feel was indicated by what happened in the election, the purpose of the campaigning is to make republicans govern with them. that's -- >> by their rules. you know, the republicans got re-elected, too, and there's more of them. >> right. well, there's more or them in the house. there is not more of them in the senate. >> and you need both houses. then you've got the debt ceiling. the debt ceiling could be ugly, john. >> yes, but that's an example in 2011 where the republicans did not govern. we knew the debt ceiling had to go up. they weren't willing to do it. we had a long fight. republicans lost the fight and the president then decided that he couldn't -- that working in a room with those people was only
part of the solution. he needed to take his case to the country. . >> john, thank you for that. i wish we could talked more about this and we will, but we'll do that with you probably tomorrow. in the meantime, coming up, we've got more of today's top stories and a hockey superstar went from top of the world to rock bottom, now he's making sure other athletes don't blow their cash. i always wait until the last minute.
oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with andrew
ross sorkin. becky quick is off today. in the headlines this morning, sprint nextel is offering $2790 a share for the 49% of clear wire that it doesn't already own. that news is out in an s.e.c. filing earlier this hour. our david faber reported earlier this week that a deal we know the two was getting closer and then it was on deal book after david reported it. and sprint -- that's not true. you know what? david has done remarkable. everything around sprint examine clearwire, he has been on the ball ahead of -- not a competit competitor. he's a colleague. >> sprint is now authorized management to proceed with that bid. and we're going to get a fresh read on holiday shopping when the government releases november sales figures at 8:30 eastern. at the same time, the government is going to release the latest on producer prices. is today thursday? and -- you didn't say it.
we want to welcome you for a thursday. i count on you for that. you'll do that later. >> i will do it later. >> and initial jobless claims comes out. also, google maps. the apple iphone. >> i'm so psyched. i can't get over this. this is it. the major headlines for the day. >> apple had replaced google maps as the default mapping application with its own app, but that app was the target, as you know, of widespread criticism. the one thing people will take away from the new iphone is that it didn't have google on it. the google map is now available as a download from appel itunes. you can get it for free. >> and the big question was, a, was google going to make it and, b, was apple going to accept it? we were at the conference yesterday. there was a lot of discussion about that issue. >> it might be easier to list who wasn't at your conference.
>> you know, you were invited to the conference. >> i was. i had something else to do. >> what did you have to do yesterday? >> wash my hair. no, i had a -- no, i would have come. i did. i had a lunch. >> it was in the city. >> no. >> you were so close, you came across the bridge? >> i also had to meet with my style team. >> okay. >> my style is lacking, apparently. >> another historic night at madison square garden and the 12-12-12 concert brought relief for hurricane sandy. the sold-out show lasted nearly six hours and was said to have reached an audience of two billion, with a b, people around the world. it was broadcast over tv, radio, internet, quite a night if you were lucky enough to have a ticket. i was actually at another charity dinner where they auctioned off tickets to this event with a car waiting outside
and some very generous person spend $19,000 and bought the tickets. >> not that much. >> 19 you think is not? >> i thought there were tickets earlier that were going for more than that, also. >> it was an extraordinary concert for an extraordinary situation. and -- >> it will be interesting to see how much money -- >> we'll probably find out soon enough how much money was raised. >> 12-12-12. and we're all still here. >> someone told me at 12:-12-12 and at 12:12, i called penelope. i wanted to be on the phone for that moment. i thought it was very row mant ek. you didn't do that. >> i didn't. >> it's really not 100 years. it's 88 years. was she laughing about that? >> she was. >> she's a big viewer.
so she knew 100 years, you could do 12-12-12 again. some twitter people wrote in, you get 13 in your mind. but there's no 13 month. >> exactly. weekly data jobless claims coming out at 8:30 eastern time forecast to drop by the 3,000 to a total of 367,000. plus, we're going to hear retail sales on the producer price index for november. let's find out what we should be watching when the opening bell hits today. scott, to me, one of the questions is was going on with -- why is the volatility so low right now? >> it is staggeringly low. it's only about 5% and it hasn't been that low but about once over the last couple of years. i think that the markets aren't going to go anywhere until we get a deal, but i think the markets are saying that ultimately we will get a deal this year.
>> fiscal cliff or it's bernanke? >> physical cliff. i think we're going to get a deal. i think that the market, though, yesterday, at least in fact last half of the day was very d disappoi disappointing, given everything mr. bernanke had done. we had a nice gain in the s&p. we gave it all back. and i think that the market is not quite certain what mr. bernanke is doing. and he now sounds like my junior high school guidance counselor. >> then why is it talking about -- >> talking about human potential. you're not living up to your human potential. >> why are you saying it's not bernanke, then? better nabky seeps to be helping as we gloss over this problem. >> well, the s&p is barely above its 50-day moving average. it's had a nice run, but it had a big problem after they got started buying mortgages back. i don't think that you can say that what we've seen over the last ten days, anyway, in the s&p is fantastic. if mr. bernanke wants to take
credit for the s&p not going anywhere over the last few days, that's fine. >> what do you think of all the dooms dayers out there? i remember even a month ago, people say, if we are in the middle of december without a dealing, the markets are going to start freaking out. we are in the middle of december without a deal and the markets are not freaking out. >> that is absolutely right. i think the tone, though, has changed a little bit. we no longer have duelling press conferences where politicians have each stripe step up to a bunch of microphones and start to blast the other one. joe is right, they need to start governing rather than campaigning. i think they're governing, but they're doing it behind closed doors because they understand that nobody is served. >> real quick, if there's a freak out, if there is volatility, it comes when, literally after january 1st at this point? >> no. i think it's right around christmas. i don't think anybody wants to be in washington, d.c. for christmas dealing with this and i think that if we get to christmas and there's not a
deal -- and they're not saying a deal will be done over the next couple of days, then i think you'll see people start to go buy options. i think the thing to watch to see if that happens is the vision. if the vix gets above 20, then we can see what's going on. >> you can always catch scott on options actions on friday afternoon. >> if you want comments on questions about anything you see here on "squawk box," e-mail us at squawk at cnbc.com or do the twitter thing. >> now you're like the recommended users. you should just tweet you direct. >> right. but you have had, what, 700 tweets, right? >> cramer, 26,000. >> carl like 8,000. >> carl is just -- he's a tweeting machine. >> puts pictures in and -- not like -- nice pictures, usually scenic pictures. still ahead, a former hockey great who went from superstar to down and out and now he's preaching fiscal responsibility. he's going to talk to us about his journey, about managing
money and why he would put the nhl in the penalty box. "squawk box" is coming right back. ct wool exports from new zealand, textile production in spain, and the use of medical technology in the u.s.? at t. rowe price, we understand the connections of a complex, global economy. it's just one reason over 75% of our mutual funds beat their 10-year lipper average. t. rowe price. invest with confidence. request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing.
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welcome back. u.s. equity futures at this hour should be up like 800 points, but they're not. down two yesterday, down 18 today. we have 85 billion a month forever from in the new normal and we never get any jobs and we basically are going to have 85 billion a month until, you know, we've got to get through that mind thing. it may only last another -- wa is it? what's today, the 13th? >> the 13th. >> so it may only be another eight days. >> i bet just the fact that we got through yesterday. >> 12-12-12-12-12-12-12.
anyway, former nhl star anderson went from being the highest paid athlete in the world to being on the streets. derek sanderson is a managing director at sports wealth management and the author of a new book, "crossing the line." the outrageous story of a hockey original. and he joins us now. congratulations on a book. congratulations, derek, on turning your life around. i can remember when you were like a -- like a babe magnet in the nhl. you had the long hair and everything. and, you know, i think about it doesn't have to be athletes, but i think about a lot of people that make money and then make bad investments and then their personal life kind of disintegrates, as well. as far as advice goes, is it financial advice or are a lot of
these -- i think you need counseling or therapy, as well, right? just for all the money and success that you have. >> well, it's a coping mechanism. it's a difficult thing to take that keep of money, when you haven't been bred to money and you don't understand mope all that wealth comes to you. it tends to get into the way of your social life. it takes the spirit away from the game that you love and play. it's a difficult thing to handle and there's a lot of counseling involved. there's a lot of put it away, don't spend it and it's very difficult to get someone 21, 22 or 23 years old to save money when they're making 78 million a year. that seems foolish. but i'll tell you, if you don't b, we try to teach the compounding of money, where it will take you. we have smart people worthing with us, wornging with athletes. >> sometimes i wonder wa comes first. these guys, they seem to be preyed upon by people with investments that don't work out
or get rich schemes or, you know, all of this stuff. i don't know what comes first. the -- you know, the money that then, you know, clouds your judgment in making investments or -- it almost seems like you would have to, you know, fix the person psychologically and then look for good investments. you can't just give a person who is enamored of the wealth, you can't just give them good investments, then they would have more money to do drugs and can alcohol with, right? if you give them good investments and you still own that stuff, then they'll be dead. >> yeah. that's a good point. and you are to remember, all the players and all the leagues play in that get rich quick scheme is there before you get there. before the young player gets there. he's already with the veterans. so you have to keep them what to be aware of. and how to behind. and this modern world technology, no matter what they do, somebody is taking a picture of it or tweeting or talking. there's very little privacy. and that's another issue.
you have to be careful of how you behalf. >> is the problem more that they're being swindled on bad investments or more that they're just mixed spending money? >> well, a lot of it, i'll tell you, the swindle appears to have made off top of thing, that happened, yes. they don't pay attention, too, and that's what we try to get them to understand is, you know, the difference, where is your money? and you have to look at it and bhain behave, take care of it. but the bad investment is always at the golf course or the restaurant or things that are very different and someone else has to manage while you're playing. and that's something you don't want to do. give someone else your money to play with while you're not watching it. >> it's a stuff environment right now. what do you tell them, go into a .6% cd? it's very difficult. what are you telling people to invest in right now, derek? >> i myself don't. i don't tell them what to --
i've been listening to you guys and you're the experts. >> uh-oh, then you're in trouble. >> yeah. and everybody watches you guys and everybody speculates and is guessing. it's a different thing. prudent, wise management is the sound way to go. >> but, derek, i would think the hardest part would be watching the prudent guy who thinks, i'm going to save my money, i'm not going to buy 20 cares and then and that, but then their teammate res. everybody else is doing it. isn't that so much the part of what's going on here, sort of the culture of it? >> there is a culture of it. and that's vary difficult thing to watch out for. it's very difficult for a player to control when they're young and they see the older guys doing foolish things. and then you can start a trend, keep the dressing room down. it's a different thing, no matter what you do or how you talk to them. >> what are we going to do with the lockout here, derek? >> i am -- i don't know. when they started this, i
thought the last cba was very good for everybody. they got their cap. they got everything they wanted. i thought the owners would be thrilled back up mr. bentman decides to turn them around and lock them out again. i want the people to understand this is not the players striking. this is a lockout. so it's difficult. the players are getting beat up, i think. and i just want to see them playing again. >> yeah. i mean, it's -- hockey was coming back, i think. >> it was with high definition. >> big screen tvs. >> high def television. it will be back. hopefully this will pass. it's a pleasure having you on today. and you're right, i think you can learn from here. watch cramer at night, watch throughout yao the date. you'll at least have all the information you need to make more intelligent decisions. >> that's right. be informed. >> thank you very much. coming up, we've got
mysteries surrounding john mcafee. he's landed in america. we've got that story now. we also have duelling guest hosts ready to take the stage coming up at 7:00 eastern time. mat miller and joe watkins, they're going to go at it. they're going to be rising above, thinking below. more on squawk as we continue. [ male announcer ] you are a business pro.
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and your mood is on its way down. you might not just be getting older. you might have a treatable condition called low testosterone or low t. millions of men, forty-five or older, may have low t. so talk to your doctor about low t. hey, michael! [ male announcer ] and step out of the shadows. hi! how are you? [ male announcer ] learn more at isitlowt.com. [ laughs ] hey! live from capitol hill today, encouraging lawmakers to try and rise above gridlock. >> fiscal cliff, of course, is a complete madeup deadline. >> discretionary spending is 1 trillion, 280 billion. we're 18 billion short of having nothing for the entire government. >> what do you think the best possible outcome could be? >> something like simpson-bowles, and work off that. >> when a deal is announced, if the left and the right aren't angry, there's not a real deal.
>> we're back on "squawk." and we've got an update on a very interesting/crazy story. john mcafee, holed up in a miami hotel after his deportation from guatemala. we've been bringing you different aspects of this throughout the past couple of weeks. the anti-virus software founder has been evading authorities in belize who want to question him in connection with the death of a neighbor who was shot, if you remember. mcafee said he did not kill the neighbor. fear for his life if he turned himself in to authorities in belize, he was tweeting and blogging about all this as it was going on. mcafee announced on his website last evening that he arrived in miami's south beach neighborhood. american airlines said mcafee sat in a coach class seat on the flight from guatemala. we're going to get robert frank on the case later to talk more about it. this is a wacky, wacky story. >> is he wanted here? >> apparently he hasn't been arrested here. >> is he wanted here? >> i don't know. maybe robert frank can tell us. >> okay. >> i can't figure out if this is
just all trumped up in his own mind. i'm not -- i don't really -- >> does he get to come back and just go to south beach and just resume where he left off? is he living large? he's got lots of money. south beach is a place where you -- >> actually, i don't understand why he left. >> we're going to talk to robert frank about all this. he knows the details. >> i've got a lot of questions. >> but let's get a quick last word from our guest host this morning, dino coast. leave us with something. give us hope. is there hope? you don't have to. you can depress us if you'd like. >> it's hard to have hope. but steve liesman was walking by a little while ago. he had a trip of bernanke talking about what the assets is for and what the fed funds rate is before and for the life of me it's really hard to reconcile what he said. he said these are two different objectives. one is for short-term stimulus, one is for longer-term economic management of some kind. and i, you know, that's the
first time that he has talked in those terms about how they are really different objectives, like tools. i think for most people this is about you either ease financial conditions or you tighten them. so, if it's getting a little -- i think even the fed -- >> communicating at this point. >> i've been -- i've thought that for awhile, actually. >> because i think maybe just the message is getting confused in the marketplace, and maybe what's happening in front of us now was always happening behind the scenes. you know better than i do, but we just didn't appreciate it. >> you know, the feds have this ongoing process of communication for 20 years. in the last few -- especially the last year, 18 months, you know -- >> they made very aggressive effort. >> and do people have more clarity? yes or no? i'm not sure that they do given what we heard -- >> one of us is right, andrew. either financial crisis, and the debt that we had built up was so big and so reinhart wrote off big that the fed knows we're
still really weak and we're not growing like we should. or, all this policies, all the regulation, all the worries, all the uncertainty, one or the other is causing us to be far below what the country is capable of, and we need the fed for training wheels and the training wheels look like they're never coming off. which is not good. i want to fly. i don't want to be at stall speed forever. i want to fly. and i want to dance! anyway, we would like to, you know, as we said, thank you. want to dance. remember that commercial? >> i do. maybe we should dance. >> wait till we go to break. >> okay. >> go. >> fox trot? >> tango. >> nice. >> coming up, the fed links the unemployment rate and more of today's top stories. we've got that and a lot more. plus we're going to go tango. rising above. "squawk" has dueling guest hosts to work out all the fiscal cliff issues that lawmakers can't. but what should the small investor do ahead of the new year? more "squawk box" next. this is america.
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the fed makes history. chairman bernanke links interest rates to the unemployment rate, but does this mean investors should get in to stocks right now. >> time for dueling guest hosts. ♪ with offers going back and forth between capitol hill and the white house, we're going to try to solve the problems on our own set with matt miller of "the washington post," and republican strategist joe watkins. ♪ >> plus taking the pulse of small investors. why volatility will be the name of the game in 2013. >> i had a bad experience on this ride once before. >> what happened? >> i threw up.
>> the second hour of "squawk box" begins right now. good morning, welcome to "squawk box" here on cnbc. the party's just getting started. becky is out today. take a look at futures as we set up the day after what was a down day yesterday. dow looks like it will open up down ten points lower. s&p 500 off about 2.5 points and the nasdaq off a little over four points as well. some of the morning headlines, sprint nextel offering $2.90 share for 49% of clearwire it doesn't already own. our own david faber reported earlier this week that the two sides were getting close to a deal. clearwire has acknowledged that the offer says the discussions between the two are continuing. the future of american airlines will be in focus today.
the ceo scheduled to address the pilots union with the view of the airline's future following its bankruptcy restructuring. the unions favor a merger with us airways that would turn management over to that airline's executives. we talked a lot about that. the u.s. home reowe potions rose to a nine-month high in november. that's according to a new figure from realty track even as the number of homes entering foreclosure process are at a six-year low. >> it did not escape all of our viewers that we were going to dance on break and then we came back with a bunch of deliverance music. that was for -- the dueling guest hosts. we already headed for dueling guest hosts. it was preproduced. and then we happened to serendipitously say we were going to do the tango on break. >> i was pushing for the fox trot. >> why can't apart? anyway "the wall street journal" says that barclays plans to eliminate as many as 2,000 jobs in its investment bank as part of the restructuring plan.
the cuts are exexpected to be announced last year. barclays would be the latest to make such a deal. and we're going to go to what we asked for. >> we talked about -- >> now we have the chance to talk to many big deems at the conference yesterday, ray dalio says low interest rates are squeezing risk premiums, and as a result most financial assets are fully priced. he thinks the biggest opportunity may be shorting the bond market. dalio wasn't very positive on any asset class and when asked about the impact of the fed and the economy, this is what he had to say. >> we're now in the situation where the impact of another quantitative easing will do very little. and so we have that as the setting, i think, for the next year. at the same time as there's fiscal weakness. we have not in our lifetimes
ever experienced a case in which there was a downturn in the economy in which there was not an ability of the central bank to ease monetary policy. >> this explains a lot. >> he was a gold guy. >> he was a gold guy. >> he was saying short bonds. >> short bonds? >> the question is when do you short bonds. that's the issue -- >> also by the way, treasury -- >> i think he was talking more about treasuries. i will say by the way, blankfein yesterday made the comment we could be in a bit of a buck around corporate treasurietreas well. >> knowing that the fed can sort of decide where bond prices are, and knowing what we heard yesterday, that it's going to be till they gave us a number, there's an unemployment number, seems like he may have to put off being right on the bond market for a couple of years.
no? >> probably shorting got to be right on the timing. >> it can cost you. because you're on markets and steve liesman is here. let me talk about this 12-12-12. you know at the 12th hour of the 12th minute and the 12 second there were like eight 12s. another historic night at madison square garden. this was the 12-12-12 concert for sandy and it brought together some of the biggest names in rock 'n' roll on one stage. the star-studded lineup included the rolling stones. i would like to move like jagger. but i can't. paul mccartney. eric clapton. the who. bruce springsteen. >> did you go straight from the concert -- >> came right in here. you see people call him them the strolling bones? >> i have heard that. >> they're said to have reached an audience of 2 billion people around the world. it was broadcast over tv, radio,
and internet. quite a night if you were lucky enough to have a ticket. i can tell you, you know that, and i wouldn't venture into that -- i mean, there were -- >> ventured into town yesterday. >> but i don't like a lot of people around. you know? >> you would have only had -- >> a private concert in your living room? >> right. anyway for the first time the fed is linking monetary policy moves with economic bench marks. cnbc's steve liesman joins us now with more. you could have been, steve, oh, you're going to do it actually. on any of the previous discussions that we've had. you could have been here and i would have valued your input. but what we finally decided was, either -- >> ten years. >> took ten years to do that. >> yeah, yeah, yeah. what we finally decided was that, whether andrew's right with this reinhart rogue off, the financial crisis was so deep, or whether i'm right that a lot of government policies with regulation, and
uncertainty, whether one of us is right about the economy, just not -- >> somewhere in the middle. >> both right in the middle. but we still need training wheels and bernanke is all too willing to have those training wheels on indefinitely. >> well, first of all from bernanke's point of view he has this zero interest rate policy. he cannot set policy below zero. he has this problem. what is the appropriate policy for the economy and the way it is given -- >> given his duel mandates. we've got to change the dual mandates. he's totally justified in what he's doing and he has total cover. >> what we don't know what the long-term effects are going to be. i thought it was like moving around skwarks. >> the universe might end at any moment. >> have you thought about what policy would be with a single man date right now? where would he be -- >> we'd be in a similar place. >> he may not be doing $85 billion. >> really? 85 is a lot. >> i want to show you a couple of cool -- go to what bernanke said yesterday.
that's the first element i have in there. he sort of explained this policy. by the way, he called it qep. i like that. could also call it qe four or even qe six. whatever you call it the fed is set to increase the balance by a trillion dollars. 6.5% and a 2.5% inflation right. bernanke was not shy about explaining his reasons. >> the conditions prevailing in the job market represent an enormous waste of human and economic potential. return to broad-based prosperity will require state improvement in the job market, which in return requires stronger economic growth. >> now just want to make sure you understand what's going on here. there were really two policies out here, and two rules. you talk about that a little bit with dino in the last hour. okay, so qe, the purchase of assets, will continue if, quote, the outlook for the labor market does not improve substantially.
keeping the fed funds rate at zero will be appropriate at least as long as the unemployment rate remains above 6.15% at inflation. notice it is not the same numbers, the same policy rules for qe. we don't know what those numbers are leading neil to talk yesterday in his criticism, he's from credit suisse, he says quote at least upon the introduction after today's fomc meeting the new guidance language seemed anything but clear. he called it the fog of transparency. you guys also were speaking about the connection between the fed and unemployment rate. diminishing returns. take a look at the chart here. on the right-hand scale there, all right, that is that is the unemployment rate and that is the green line. the blue line. they messed that up. the other point is supposed to go down, the blue line, in a very shallow way. the green line which is the balance sheet, shoots up. so there you see that the fed's own forecast is you go down from 7.75 down to 7.5.
20 basis points, in the next year for a trillion dollars. which is not really a whole lot of return. then the other thing, if you look at the forecast they really lowered their forecast. they do see a 3% growth quarter but they brought it down, they did a trillion dollars of qe, or forecast that, and they brought their forecast down by a tenth. so they're seeing diminishing returns. >> steeper. >> you're doing more qe. >> i'm not sure we all made enough of this. way did a trillion dollar balance sheet in '09 to '12. that's four years. we're going to do a trillion alone next year. so this is a big and rapid expansion. >> can i ask you a question? in the last hour we talked about chun indication. do you think that now there's an overcommunication that's going on? meaning did all this stuff really happen in the background and we just never knew it?
>> there's a change in communication. i don't think the fed -- first of all, nobody heard dino say it. i said it yesterday. nobody was ready -- >> we all said we want more transparency. >> right, right. now it's a little bit. the grass is always clearer on the other side of the hill. calendar dates we understood. now i've got to think about how unemployment rate -- >> i do want to know. >> but the thing that i'm worried about is that, if we're in a new era of normal, a pimco era where we're at the lowest unemployment rate we get is still at 6.5 or above. that's huge. >> what you're suggesting is huge. what you're saying is that 6.5%, the new normal, in other words, what they call the naru, nonaccelerating rate of unemployment. that changes everything. that means the fed is way too easy. if 6.5 is the new 4.5, then that 85 billion has to go away. what you would then get would be huge inflation if that's true. >> right. >> you would get wage
acceleration. you would get pricing increases. that's what would happen. that's not the feeling of the fed. it's not 9 general consensus. >> i hope not. >> you know, morning in america. we're getting back to 4. >> you also have that slack. remember why we talked about the u-6, we talked about that, because that's total slack in the labor market. that's, i think, what bernanke wants to see come down. i think he's out of different ideas. he's got this main thing he can do. not out of bullets. it's going to press on those. >> all right. >> thanks. >> kind of glad. we are just -- we're just seven -- we're just weeks away from the fiscal cliff deadline. still no deal. joining us for the next two hours is our guest host matt miller, cowl up nist at "the washington post." former white house aide under president clinton and joe watkins, former george h.w. bush white house aide and republican strategist. i'm sure these guys will
probably be metaphors for what's happening in europe. >> we want to rise above it. >> which would mean -- >> could mean matt is going to slow walk us over the cliff so that in our opinion -- >> did you see how long it took him to get from the green room here? >> let me ask you. are you guys, republicans still saying that jobs matter if we raise taxes? you finally said oh,ist not that big a deal anyway. where are you? have you thrown in the tall? >> not at least to the public. we've got to make the point over and over and over again that, you know, we can get to this number, we can do this, the republicans have offered a deal that makes sense, that's reasonable. that says guess what you can do. you can get this done without raising marginal rates. you don't have to beat down folks who are small businesses, who are successful, to get where you want to go. you can do it by -- >> beat them down by taking them
back to the clinton era rates of 22 million jobs? >> this is -- >> but you don't want to go back to the clinton era rates. you only want to go back on the top 2%. the reason we were able to balance the budget -- >> so it's better. >> but the reason we were able to balance the budget and have a surplus was because we were raising a lot of money because everybody was paying in >> yes. >> go back to that top 2% you hardly raise any money. >> it's -- >> that's not the clinton tax rate. >> larry summers -- >> i'm not done. >> all right. >> then. >> why -- >> if the boomers retire, of course taxes are going to rise as a share of gdp. we're doubling the number of seniors on social security and medicare. this is what the democrats now want to do, as a first step. they feel it was the inequality of the justice argument, blah, blah, blah, and if that's a piece of the beginning of the adjustment to the boomer's retirement, fine. >> don't you really wish we were talking more about entitlement reform and spending than just taxes? >> i think we need to talk about that, joe. >> they want to talk about --
>> you're the only one on your side who wants to do both, then. >> i'm a unique individual. >> the right answer would be to link -- i think what's so interesting about what bernanke did yesterday, people like me have been writing for the last few years, what we need is a fiscal deal that says stimulus, infrastructure, all this stuff in the near-term, when we've got 23 million people who are looking for full-time work and can't find it. and then when unemployment is below some trigger rate, which is what bernanke has for the first time done,ook the unelected chairman of the fed, very weird thing in a democracy, that he's the one talking about the enormous waste of human capital. he sounds like a bleeding heart liberal, right? and he's right. why is he the one in our system who talks about the need to take extraordinary measures to try and get people into the job market, and then adjust once we've gotten back to something like whatever the new rate of unemployment. >> what you're saying, though, to the corporate -- >> i'm confounding you ideologically, i know. >> no -- >> what are you saying about the
bush era tax cuts? what are you saying about that? >> -- the greatest thing ever done. >> now with the economy being as fragile as anemic as it is would you want to raise taxes on folks making over 250? i mean somebody in the northeast who is making over 250, just over 250, by the way, with a family, with kids in college, with a mortgage to pay, with a couple cars, they don't have any money. >> and below 250 you can't raise it, but above 250, absolutely matters. >> we're going to continue this conversation after the break. but i would also say, we're not only talking about higher rates, you're also talking about deductions for those people, as well. so we're not really talking about clinton era tax rates. we're talking about something else. >> you're not talking about clinton era spending, size of government. >> anyway. bingo. >> this will continue in the meantime, check futures real quick. it's not setting up nicely after mr. bernanke's announcement yesterday. looks like we'd open up with another down day. not horrible but not great, either. coming up next the markets, yep,
appearing to shrug off the fed's move to get aggressive on the economy. we're going to take a look at where you should be putting your money to work. write now, "squawk box" on cnbc profit from it. ....hahaahahaha! oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more.
>> you sounded as if we had a deal. >> that's the way you do it then you pull it back. people get all interested. they turn off the mute button. they call their friends, watch cnbc, there's a buyout. then they say, it could be getting closer. >> we've been telling this -- >> but it's still interesting. >> very interesting. >> dow jones reports that founder rush ard schultz will submit a formal offer this week. apparently he's going to run starbucks and best buy. the neighborhood is said to be in the $5 billion to $6 billion. be that good. >> are they brothers? >> big box retailer. >> okay. >> let's get some investment ideas and find out the significance of fed chief ben bernanke's comments. yesterday, joining us now, jason trendert of strategic research -- >> what did i say? >> anyway, jason it's good to see you. chief investment officer and managing partner.
you saw what ben had to say yesterday and you did what? >> i thought it was a little more aggressive than i was expecting. but i mean, trackly, i don't know why i would be surprised by that. because ben bernanke has been clear, very open about the fact that he wants to be more aggressive. i have to say, though, that i never really thought that this would be very efficacious. you have 30-year fixed rate mortgage of 3.5. fed's done a lot. and it seems to me it has to be much more on the fiscal side than the regulatory side to get things moving -- >> what the heck are you doing then as an investor? what are you supposed to do after all this? >> what i will say, andrew, that one thing that concerned me a little bit is the market actually closed down slightly. that there was initial reaction to it, and you never want to see markets sell off on what should be -- >> doesn't look like it's going to open much higher today. >> right. you don't want to see markets sell off which should be good news. other investors are coming to
the conclusion that you have diminishing marginal returns. >> listen the fed can literally drop money out of helicopters. they've been doing that. the problem is it's going directly into bank vaults. the velocity of money continues to go down and it's very, very hard -- >> so give me the investment idea. >> the investment idea to me is that it's not going to help. and that i think the other -- we actually think -- >> and therefore you do what? >> the last time -- just give me a second here, andrew. i'm trying to get to it, okay? we, i think, are going to -- there's going to be a slowdown in the economy. want to be very careful in terms of retail stocks. we still want to be in very defensive sectors. and that really has nothing to do with the fed. which was the original question that you were asking. i think it has to come much more from the fiscal and the regulatory side and it doesn't look like you're going to get much of a deal there. >> hmm. so you -- you think -- so now we're back to the fiscal cliff. you think there is no deal coming? or you think we're getting a baby deal? >> i think you're getting a baby
deal. and i think without structural. true structural reform i don't think you're going to have the types of risk taking on the part of businesses that would generate real growth. and i think there is a yawning gap between business confidence and consumer confidence right now. capital spending is already weakened. but consumer confidence still remains relatively high. >> when does it hit the consumer? >> i think really in the first quarter. because especially if the payroll tax cut is not extended, which it seems very possible, that is a very big deal. i also think you really have to watch to see whether the debt ceiling is actually extended. and if the debt ceiling is not extended as part of this deal, that's also a very, very negative development, because it means we're going to have another couple of months of wrangling. >> jason. thank you for your -- >> thank you. >> sorry to push you on this. >> not a problem. >> i appreciate you pushing back. >> not a problem. >> coming up, house speaker john boehner telling his colleagues to cancel christmas plans. that's the word. we speak to our guest hosts
about what it will take to get a deal done in d.c. over christmas break. i can't believe it. plus the former ceo of e trade now running jefferson national is going to tell us what this all means for the average investor. americans are always ready to work hard for a better future. since ameriprise financial was founded back in 1894, they've been committed to putting clients first. helping generations through tough times. good times. never taking a bailout. there when you need them. helping millions of americans over the centuries. the strength of a global financial leader. the heart of a one-to-one relationship. together for your future. ♪
you've got comments, questions about anything you see on "squawk," shoot us an e-mail. you can also follow us on twitter @squawkcnbc is our handle. joe, what's your handle? >> it's either @joesquawk or @squawkjoe. >> it's one of those. next the trading block, the day after the fed meeting and the chairman's news conference, what is the trade to make right now? and then later, mitchell cap lon, ceo of jefferson national and former ceo of e-trade financial is going to give us the pulse of the market. tomorrow on "squawk box" we'll go inside the fed's latest move. a special extended interview with dallas fed president richard fisher. quantitative easing, the economy and the fiscal cliff. don't miss "squawk box" starting tomorrow at 6:00 a.m. ♪ [ engine revs ] ♪
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flood of economic data. november retail sales, producer price index and weekly jobless claims set to hit the tape at 8:30 eastern. also juicy news out of europe. european leaders have agreed to hand over the next batch of loans to greece. the country will get about 48 billion euros between now and march and the european union finance ministers have reached a landmark deal on banking supervision that makes european central banks the region's top banking supervisor. it will be approved by eu leaders later today. and solar city going public today. it was supposed to happen yesterday. solar equipmentmaker sold 11.5 million shares at $8 per share. but that is below earlier estimates of $13 to $15 per share. and ivan musk still going to make a lot of money doing that. one other story to note,s new york city's taxi and limousine commission voting today on a proposal that would permit taxi
drivers to use taxi hailing apps. we've talked about this before like uber. the use of taxi handling apps, smart phone apps like uber, haywell and others rising sharply around the country. i use it sometimes. there is some pushback, though, on these apps. a group of livery and black car owners have asked the commission to reject the proposal. also big issues about the value of a medallion in new york city. it's a huge market for that. and how annoying is this? you ever stand on the street in new york city and you see the cab go by you with nobody in it? that might start happening a lot if people are using these apps because the taxi driver would get an order on the app, and say oh, i'm going to go three blocks but there's two people on the block before he gets there, and so there's big questions of how this is going to work. this vote would allow them to temporarily at least try this. uber tried to get into this market about a month or two ago, and then was ultimately blocked by the commission. so, those in new york playing with the app, today may be your day to at least experiment. and we have a -- we have 75%
participation in rise above here. we've got -- i've got the hatfields, and the mccoys here. i've got hannity and holmes. and you are the 25% that is not -- for you, listen, rise above -- no, for joe, rise above is the obama administration needs to rise above. for you, it's the house and boehner need to rise above. for me, it's everybody needs to rise. it's not a partisan thing. it's a let's do this. >> what about marc andreessen? let's not rise above anything. >> he's like one of the only people. we've got all this -- >> okay. >> we gave you one. >> there's a sink below caucus. >> here it is. you want me to tie my tie like you? >> put it on your tie. it's like a rorschach. it can mean anything to you. we just want to get this done. >> my styist would not be happy with this look. >> your stylist has got a lot of work to do. that's not your problem right
there. oil prices are hanging around $86 a barrel while gold prices are tumbling following the fed delayed decision to push ahead with another round of stimulus measures. guy wolf, let's look at the trading block here. different markets and see. guy wolf is macro strategist at marex speculation and jim moor yo is on constantly on cnbc. unless there's more than one of him. joining from the cme. as i said, a cnbc contributocon. guy, i'll start with you. i just referenced and we had jason trennert say the same thing, traders used to just mainline like fed 85 billion a month. that used to give us a great -- >> how do you know about that? mainline? >> because they're -- >> because they're addicts, traders. and they don't care about
structural. they don't care about anything but gimme, gimme from the fed. they weren't even impressed by 85 billion until 2016. are the benefits of this policy to just not be apparent, and the negative effects, you know, coming more into the fore? >> yeah, i mean. a couple of factors. first is the fed are not the only ones out there quantitative easing. when they started they were the only central bank out there, so it had an unusual effect on their currency. whereas now it's much more -- keeping up with everyone else. as things roll off they have to do more just to keep things neutral. when they announce a new amount of buying, then you have to also factor in the amount of previous buying from the previous rolling off. it's much harder to really accelerate aggressively. and finally, in what actual real stimulus is there? you know, you look at 30-year mortgage rates. how much lower can they go? is that really going to put a lot of money in people's pockets? is that really going to stimulate growth? i don't think so. so incrementally, fewer and
fewer impacts on growth. >> but with him, necessarily, the market didn't go down 300 either. so we haven't decided that the negative effects, the negative effects long-term of this are going to be really nasty. and some people, there are some people who feel that way. that once we do this we're never going to be able to get out of it. >> the fed will never get out. what will happen to markets when the fed announce they're going to start selling their portfolio? you know, i thought it was insane, really, to even pick a number for unemployment and inflation at which they would start raising rates. because every time the unemployment rate goes down markets are going to panic that the fed is going to start hiking. >> that's another thing. >> why is 6.6% crisis time but 6.4%. as soon as you give the market a number. >> 2% doesn't hurt anyone -- >> i'm going back to my communication problem. would you like to know that this is what they're thinking behind the scenes or would you like to know this is what they're thinking in front of the curtain?
>> i think you need to keep people guessing. as soon as you hang a number out there, who knows if it's the right number. no one has any idea. >> ray dalio would be right. >> he would be right. >> if they start selling -- >> if the fed starts selling you're going to be selling into that. how quickly could rates go up. what do you think, jim? you listening to this? >> yeah, of course i'm listening to it. >> i thought you were wandering off, looking around. >> a couple times. but i'm back in. i got most of it. okay, one the market thinks we won't get as much bang for the buck going forward. two when the unusual market got out the market had a difficult time deciding what was stronger language. the previous rates stay low for 2015 or the new language stay low until under 6%. the move from 9% to 8% was relatively quickly. i think what the fed is saying the move from 8% to 6.5% any real strength in the labor market is going to be accompanied with strength in the participation rate and that's going to be much tougher sledding. realistically this language is
stronger language than the 2015 language. but yes, you said the bad long-term effects from keeping rates low. i think there's bad immediate-term effects. there's tons of pension fund managers out there budgeting 6.5% to 8% and the only way they're going to meet that is if states start to increase taxes. there's also a ton of baby boomers, retirees, or people who saved money along the way who used to count on some sort of income stream, and now are getting used to this new paradigm where there's no yield on the money, no risk for yield on the money so they're dialing back their habit. think of it as a medium, somewhat deflationary effect. >> why do you think the participation rate is going to go up? since the end of the recession as we've dropped from 10% to 7.7% the participation rate has gone from 67 to -- or 65 to 63 so why would it go up now? >> i didn't say it was going to go up. i said i think the fed thinks it's going to go up if there's
real live strength in the labor market. i will say i do probably agree with them. if there's real live jobs created not just mcdonald's and yum brands, i think we could expect the participation rate to go up a bit. i think they're giving themselves proper cover saying the 6.5% rate. >> i thought it was amazing. i used to say the fed just say we're going to keep rates low for a bunch of reallies, really, really, and they did that policy. i don't know what's worse that policies, or giving a number -- >> there's big problems with transparency. because the market tends to think that the fed really knows what they're talking about. if you look at their history about being accurate in their predictions, i'm not saying they're awful, but they're no better than most other groups of economists. the fed can say we're going to keep rates low through 2015. that doesn't mean anything but the market sometimes thinks it does and immediately adjust those rates. >> how do you pronounce the fed
chairman's name? >> i won't do this. i'm not falling for your tricks, joe. >> do it? >> bernanke. >> wow, you got a hernia, getting it. what is it with you people in chicago to get that out. we just had scott nations on, he said bernanke six times. he's college educated. i know he had phonics. >> he's an intelligent guy. i don't know why. >> i know he sees there's two "ns," he doesn't care. >> i call him the chairman just to avoid it. >> i think you like him so they call him timmy geithner. >> that's probably the case. >> a measure of disrespect. >> bernanke, like -- all right. thank you guys, thank you. you're not from these parts, are you? >> i'm from enland. >> thanks. how quickly did i figure that out. >> anyway. thank you. >> thank you, guy. thanks, jim. putting money to work or sticking to the sidelines. on his way to the set, make your way out, mitchell kaplan, ceo of jefferson national and former
ceo of e-trade financial. we're going to find out how investors can rise above the fiscal cliff uncertainty. check out best buy this morning. take a look at this. we are up a little over 12%. buyout deal for electronics retail may be getting closer. dow jones reporting that the founder of that company will submit a former -- a formal offer this week. that story and a lot more in stocks to watch in just a bit. [ male announcer ] at scottrade, we believe the more you know, the better you trade. so we have ongoing webinars and interactive learning, plus, in-branch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. our teams have the information you want when you need it. it's another reason more investors are saying... [ ] i'm with scottrade.
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volatility is the name of the game when it comes to making money. is that true? i'm not sure. and our next guest says you can expect more of it in 2013. we haven't had a lot of it yet. mitchell kaplan is the ceo of jefferson national and former ceo of e-trade financial. >> that's how i know him. >> looks like a virtual party here on the set. guests are allowed to come in. usually we don't talk about it. >> were you handing out pins? >> no, i've got pastries. i was making sure it's under $50.
>> where has the volatility been? i think with the fiscal cliff, so many people were expecting we're in the middle of december. the world was supposed to be falling apart by now. that was the threat to the politicians in washington. >> i agree. it's fascinating. after leaving e-trade i got involved in a company which its business model is really about solely serving the fee-based market advisory market so registered investment advisers and fee-based advisers. so we see perspective of individual consumers through their lens, their clients. what they're basically saying, we do surveys, we happen to be in the process not unlike the days of e-trade of doing focus groups, and what we're hearing is 85%, 90% of their clients are absolutely fearful of what the fiscal cliff means. and they are afraid that the volatility is yet to come. it's interesting. it's a little like -- >> so they're out of the market? they're on the sidelines? >> i think there are two different behaviors. you have the self-directed which think about the e-trade model. and so on self-directed i think you've heard consistently a lot
of people have withdrawn. trading volumes are dawn. they're uncertain of what to do. you probably are seeing less volatility. as a result of that, and then when you look at the money that's being managed by advisers i think people are thinking about, from an advisory perspective, what can we do to dampen that volatility? >> people are fearful, everyone's supposed to go in the markets. is this a good time? >> i don't know. i think it used to be that when people were fearful they got in the market. i think people have gotten so badly burned over the last ten years -- >> it's not just the fiscal cliff. it's the journal piece from earlier this week that you saw. the "journal" piece had 2001 and the tech bubble burst. that was followed a couple years later by the financial crisis where everybody lost and watched the market go to 6,000. now, you know, they got the fiscal cliff and they just got burned. so everybody -- i don't think the fiscal cliff in and of itself is what it is. but it adds -- and then you've got all the stuff you were bringing up, hsbc, you've got the high frequency trading. you got the flash crash.
you got the idea that it's not an even playing field. >> and then when interest rates are 1% or 2% people feel like no one knows what they should do. >> to what end? i think a big part of it is you have to step back and say what's the bigger picture? what's the concern? a lot of people feel like the system is rigged. so that, you know, one of the things that was interesting to me at e-trade was watching the evolution of self-directed to a need for guidance. sort of some level of guided advice. >> do you believe the -- do you believe that the retail investor has a fair shot? against the institutional investor? >> no. no. i do not. >> i do not. i think that at the end of the day to level the playing field, there are certain products and services that you can buy self-directed. >> shouldn't we be trying to level the playing field? >> of course. of course. >> but the answer is it's never going to be fair --
>> the same information as an institution -- >> no, you don't. >> but we used to explain it, when i was in business, that the big institutions were like the elephants running around, they were in -- but little mice, if you're very quick, you can learn from the elephant. and you can actually do pretty well piggybacking certain things. i don't know if i just go and say that it's absolutely not, that the individual investor, between 1982 and 2000, the individual investor was able to make. sooner or later we're going to get back. we've had twelve years -- >> absolutely. you operate in spectrums. they always move too far in one direction or the other. i think if you are an investor and you think about things over the long-term, the playing field -- >> what are you a -- >> i want to know whether the playing field -- >> so you were at e-trade you were perfectly willing to put all these poor people into the lion's den. now you're not at e-trade and it hasn't been fair? all along you shouldn't have been running e-trade then. you should have said, go away, don't open an account! >> no because the view at e-trade and it's the same view
for us today at jefferson national is the way to level the playing field is to encourage people -- >> hire jefferson national? >> no. encourage people to save low cost because you actually use technology and you disintermediate the distribution channel in a way that it's a much better value safety products and services and try to educate and inform. and you are leveling the playing field because you're telling whoever your client is, whether for us it's today an adviser or a direct consumer, here's the information. and you can do it low-cost. and i firmly believe that if you consistently provide that value equation, and you have a client who is thinking about building for their future, or their retirement, and they're patient, then you can do much better -- >> when you're small you can actually -- big investors lose their ass, too. >> that's true. >> there's times where you're small where you can be more nimble, and i don't know if i buy -- >> look at the financial crisis. the people who are the biggest losers who are the biggest
institutions. the taxpayers had to pay their fair share. but everybody has had more than -- >> like someone coming on cnbc saying the individual investor doesn't have a fair shot. you know what i mean? especially some guy who used to run e-trade. >> it's that they don't have a fair shot and they don't have the same access realtime to the broader set of information. but that was the goal of e-trade, was to try to disseminate information. >> sometimes that's way too short-term for you anyway. >> and they don't have investment committees, as well. >> agreed. but i think the most important thing is, if you change the mantra so people think about investing for the long term, it does level the playing field. >> right. okay. >> that's really the most important take away for me. is this country has historically been overlevered. individuals have been overlevered. we haven't saved enough. if you step back and say the goal is to save for retirement. how do you do that with high value and information? then you begin to level the playing field. when i say it's not level i worry about more people who are trying to be more active intraday traders on information.
>> well i'm glad. >> did you do a twelve-step thing? >> no. >> step one. >> all those years. all those years -- >> sworn off -- >> build value products. >> okay. >> mitchell thank you for being here. >> my pleasure. >> coming up, check out the futures right now. see whether, you know, someone has fixed these and made them totally unfair. there they are. anyway, now we're up! we're up! >> he talks, we go up. >> in spite of that. anyway, up 11.5. still to come this morning, pimco's neil kath cari tells us what's working. mark reuss. >> tomato, tomato. >> good guy. if we don't know you probably don't know. doesn't matter. we'll unveil the latest and greatest pickup trucks. at 8:30 eastern jobless claims, ppi and retail sales.
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she's always staring at me ♪ >> let's take a look at some stocks to watch this morning. we talked about clearwire. faber knew about it. cnbc's david faber reported earlier this week this was going to happen. sprint nextel is going to offer $2.90 for the 49% of the company it doesn't already own. >> surprised he hasn't called in yet to walk us through this. >> and you can also, as we always say, it's probably now on andrew's m&a website. after david faber breaks these things it usually ends up on dealbook. >> thank you. >> best buy founder richard schulze makes a formal takeover offer this week according to the "minneapolis star tribune." yum brands is upgraded by goldman sachs to buy from neutral. citing increased potential for yum's operations in china. although, that's what we talk about all the time.
kfc in china. that's the growth in their, i think isn't yum bigger than mcdonald's in terms of total number? >> yeah. >> i think subway is, too. research -- >> they don't even call it kentucky tried anymore. >> kfc. >> and it's really chicken. >> that's uncalled for. what do you think it is, cat? that is uncalled for. >> this is all i'll say. >> tastes like chicken. >> yes, it's chicken! if david novak -- >> taco bell. >> yeah, taco bell. >> is that really meat? is that your next -- >> no. all right. the restaurant -- research in motion, rim shares coming off a seven-month high on news that the u.s. immigrations and customs enforcement agent are going to use the blackberry 10 on a trial basis. that is on news, did you see this, that the agency is going to ditch the iphone in favor -- >> okay, so why? >> i don't know. i just want to say, so
blackberry was one of the sponsors of the thing yesterday, at the dealbook conference and they showed off the blackberry 10. >> kel me about it. >> they have one with a keyboard and one without. i actually, forgetting about being a journalist or related to a sponsor, i actually thought it was neat. i, as a consumer was thinking, i may have to get this thing. because i have not made the move. >> i know. >> you may have to wait. >> you may not -- >> wait for this thing. >> we've got to go. >> coming up pimco manages more than $1.5 trillion with a "t." find out how the company is planning for the fiscal cliff.
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switching to geico sure are happy. how happy are they jimmy? happier than antelope with night-vision goggles. nice! get happy. get geico. fifteen minutes could save you fifteen percent or more. the fed ties interest rates to unemployment. >> our situation has not improved. >> pimco's kneel kashkari on the fed's latest move. the looming fiscal cliff and investment opportunities for 2015. >> gm set to unveil two new trucks. we're going to talk to president of gm's north america first on cnbc. plus a flood of economic data. >> i don't even know you. >> are you okay? >> yeah. >> weekly jobless claims, producer prices, and retail
sales hit the tape at 8:30 a.m. eastern. the third hour of "squawk box" starts right now. welcome back to "squawk box" here on cnbc. first in business worldwide, i'm joe kernen along with andrew ross sorkin. becky is off today. our guest host this morning, republican strategist on my left, but on my camera right, joe watkins. he's rising above today. and then on my right but actual la camera left and to the left -- oh, i'm sorry, joe is former g.h.w., 41, you were in that administration. matt miller was in the clinton administration, and now you toil at "the washington post." are you allowed to do that to go from clinton to just being some objective columnist at "the
washington post"? >> who says i'm on jettive. >> i was leading you into that. >> we have more from them in just a minute. first andrew has this morning's headlines. >> "the wall street journal" saying that barclays plans to eliminate as many as 2,000 jobs. the cuts expected to be announced next year. barclays would be the latest to make such a move with ubs, deutsche bank, credit suisse and citi all announcing job cuts in recent weeks. google maps returning to apple's iphone and ipad. i've been waiting for this for awhile. apple had replaced google maps as the default mapping application with its own app. but that was the target of widespread criticism. people couldn't figure out where they were supposed to go. the new google app is now available as a download from apple's itunes store. includes voice activated turn by turn directions which was previously only available on the android version of the app. for those of you including myself who have not upgraded to ios6 because of this mapping feature, now things may change. also long hours ahead, jeffrey,
to wrap? for the third straight year toys "r" us is going to keep its stores open 24/7 from the morning of december 21st to 10:00 p.m. on christmas eve. >> well, we'll see. december 21st there may not be -- >> you're talking about the mayans? >> yeah, we'll see. they're planning. >> they're planning to do this. >> won't have to worry about the fiscal cliff, either >> no, no, no. that's what they said. the market sold off on prospects for the fiscal cliff. but then the mayans -- yeah, exactly. we've got to get through that. maybe something for the mayans. >> we've got to get a separate pin for the mayans. we've got to get a lot of pins. we're going to flair, like remember tgif. >> the suspenders with lots of pins. the retailers flagship store in times square open around the clock since december 2nd. toys "r" us joins macy's on the late shift which will be open all night from december 21st to
the 23rd. both chains will have special sales for those burning the midnight oil which is typically what happens to me. let's get a check on the markets this morning. u.s. equity futures at this hour. dow jones looks like it will open off 7.5 points. s&p 500 also down, all off marginally after ben bernanke's press conference yesterday overseas in asia you can see what happened there. the hang seng off slightly. shanghai composite off slightly and the nikkei up, actually, not badly, too. finally in europe, the ftse, the cac and the dax also off again marginally. >> that's the way to headline. markets sold off in the morning when it was proven the mayans were going to be right but rallied in the afternoon when there was progress on the fiscal cliff. if you didn't get through the mayan -- >> and toys "r" us would then stay open all night. >> no one really thinks something's going to happen, do they, on the 21st? >> i don't know.
sfl i don't know. there might be viewers out there. >> i think we're going to make it i want to hear it from you. >> so we can fall off the cliff. >> exactly. >> the fed's linking interest rates to unemployment rates are going to stay where they are right now which is close to zero until at the very least the jobless rate falls to 6.5%. and as expected the central bank ramps up its asset purchases. sooner or later this is going to be real money. adding $45 billion to the 40 billion it's already spending per month purchasing securities. it is said to increase the balance sheet by a trillion dollars over the next year. and you can,know, if it goes all the way to when they think it will go to get to 6.5. just add a trillion dollars a year. joining us now neel kashkari head of global inquiries at pimco. the first thing we've been eluding to all morning i know that our friend mohammed al ariane has probably been more of a proponent of the new normal.
i don't know whether that's a pimco idea, the firm that pimco came up with following the fiscal crisis -- not the fiscal -- financial crisis. if you still believe that, what if we never get to 6.5%. >> well, hi, joe. it's great to see you. you're exactly right. just a month ago chairman bernanke for the first time acknowledged that the u.s. has structurally lower economic growth. but we've been calling the new normal for the last few years. and you're exactly right. that means the fed, if you combine that with yesterday's announcement, that means the fed is going to be exceptionally easy for a long time, and that it could be a couple years or could be three, four years, maybe even longer, because unemployment is now structurally higher. we hope it's 6.5% is not the new naru, the new minimum unemployment. certainly it is increasing. the longer people stay unemployed the more structural it becomes. the fed is really in a box here. they're trying to engineer financial market outcomes. trying to raise the prices of
risk assets across the economy. the problem is, we don't think they can engineer real economic outcomes. they can make the financial markets look better, but even at that, they're becoming marginally less effective. they're needing to use more and more stimulus to engineer the financial market outcomes. so we're happy that they're trying to do what they can do. we don't think it's going to lead to real economic growth. >> you could have been here -- this is what we've been talking about all morning long. getting less and less for every time you announce something. down three yesterday, even though it was all the way up to 85 billion a month. so when mohammed, and bill and you guys came up with the new normal, you did not actually say what it's called naru, i understand that now. i've heard it a couple times today. you did not come up with an actual number where the new lowest rate would be for unemployment? >> i think there are a wide range of opinions within pimco. we know it's higher than 4.5%. >> that's what it used to be, 4.5. >> 4, 4.5 historically what people thought about.
the truth is we don't know exactly what the right number is. and unfortunately the longer this takes, the higher it probably becomes because as people become detached from the labor force, unfortunately they become unemployable and it becomes a large swath of the economy that exits the labor force. whether it takes 2.5 years or 3.5 years or 5 years to fall down to 6.5%, part of that determines is the participation rate in unemployment. how many people leave the labor force. and so this is a very, very tough problem for the u.s. economy, and chairman bernanke has very limited tools in what he can do about it. >> you know what's interesting, though, it's really greenspan back in the '90s, wasn't it, neel, he kind of pushed the envelope to discover the lower naru that we thought was in the 5%, 4.5% range, so the idea that -- he was criticized but it was pretty gutsy move for him to stay on the pedal to see how low it could go. >> maybe it was never really 4. >> maybe it is.
maybe there's other stuff going on in the economy. there's technology changing. the advent of the robot. there's a bunch of stuff going on besides working off the asset bubble that we have that we probably even, you know, the brains at this table can't sort of see -- >> how big is the balance sheet now? >> it's almost 3 trillion today. >> if people were worried about 3 trillion already. they were saying that's going to be hard to extricate yourself from. we go up a trillion a year now and talking 2016 so we're going to, is that three years, 6 trillion? is that okay? >> you know, it could be that large. i'm not sure if it's okay. bernanke should be credited for being very bold and experimenting. but the problem is, we don't know how any of this ends. we do know that this is likely going to lead to inflation. right? the fed has said 2.5% is the new cap. but if you drill down on the 2.5%. it's their own forecast of inflation. it's not an independent measurement. so they've bought themselves an awful lot of flexibility to be aggressive, and to keep their liquidity flowing. but at the end of the day, this
is not going to lead to real economic growth. unfortunately, it likely leads to an inflationary outcome. the only good news is it's likely a new years away. it's not inflation around the corner. >> but it might give us time to deal with this, i mean, if we could be optimistic and rise above, we deal with the fiscal cliff, then the fiscal abyss. the fed keeps us sort of above stall speed and then we do some structural things, would that work? >> that's -- joe, that's exactly what we're all hoping for. we hope that republicans and democrats, the congress, the administration, can enact bold structural reforms to make the economy more growth oriented. and you know, live within our means. manage our budgets. if we can do that, then the fed is building a bridge to the congress. >> you talking about the congress? >> pardon me? >> live within our means and manage our budgets? are you talking about the congress? >> well, you know, we've done it in the past. we can all be very bearish on our political system. but our political system over the long-term works. republicans and democrats have come together before, have made tough choices.
if we can do it again, then bernanke's actions are not going to be for naught. they're going to be buying time for leaders in washington to take over. but if leaders in washington don't take over, then ultimately this is just going to lead to an inflationary outcome and it will all be for naught. >> what i'm worried about on the political side is we could be on the verge of an endless cliff and we may be falling into this, this kind of perfectly dysfunctional political equilibrium that will be self-perpetuating. because if you have a cliff know, i mean, i think the -- if most we're going to have a little bridge deal or some patch of a deal that says, okay, we'll come back and have time to work out tax, entitlement reform with another cliff. but what's going to change between now and then politically that will make it work? and maybe we get another down payment and another cliff. >> gridlock, people used to like it on the right because it meant that the government couldn't do anything. but we've got all these things where if you don't do anything, something's happening because you didn't do anything. that's what makes it different this time. and gridlock, so neel, have you
bought any stocks? we heard dalio say bonds, i think pimco's been of that mind for awhile that bonds probably aren't the place to go right now. >> we think returns across asset classes are going to be lower going forward than we've been used to in the past. but equities should do better than bands over the intermediate term. we're being very selective. we're not buying the market as a whole. we're buying companies that we think are market leaders. very strong balance smeets and a very attractive valuations, that we're going to hold for months or probably years. so long-term buys, of individual names rather than the market as a whole. >> two things. one on dalio and we forgot to mention this earlier. he is bullish on one thing. he's bullish on agricultural property in australia. so, if you have agricultural property in australia, you should go buy it immediately. honestly that's what he said yesterday, i forgot about that. >> because there's -- >> i'm not even sure i und stood. but when is the freakout moment? we talked about this this morning, so many people thought there was going to be a freakout
moment come mid-december. does it now come post-january 1st if we don't get a deal? is there a freakout moment or is this actually what you just said, this sort of perpetual cliff and people sort of get over it? >> i think that people are recognizing it's not truly a fiscal cliff. you know, chairman bernanke was asked this question yesterday. it's more of a fiscal hill. the world does not end on january 1st if there's no deal. though we would expect to see volatility increase, probably the equity markets pull back. that may put more pressure on congress and the president to come together. ultimately if there is no resolution, which we think there will be, we will be in recession next year and that will absolutely hurt the economy, obviously hurt the markets. but it's not as though everything ends on january 1st. so hopefully they kind of got there at the last possible second and do the bare minimum at least. maybe they'll do more than that. but i'm not holding my breath for more bold action in the next couple weeks. >> maybe fiscal end. >> we do got to go i guess.
when you guys still, and mohammed, you all get together and hash things out, i guess? you talk more about bernanke or more about washington? >> well it depends on the day. i mean, the fiscal cliff we're watching very, very closely. obviously yesterday, you said it joe, yesterday's moves were exceptionally bold. the markets kind of look through them. i think the markets are trying to digest what exactly it means. and how the fed is really going to behave going forward and what the 6.5% means. we're very, very focused on these issues, too. >> you're back here in new york. so we didn't get you up at 5:00 in the morning. all right. neel, thank you. >> thanks very much. >> we'll see you. >> coming up, gm set to unveil two new pickup trucks. cnbc's phil lebeau going to join us next with president of gm north america. and at the bottom of the hour, the government's latest read on employment, inflation, and the consumer. we're going to get jobless claims, ppi and retail sales numbers. well, having a ton of locations doesn't hurt. and a santa to boot! [ chuckles ] right, baby. oh, sir. that is a customer.
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cnbc's phil lebeau joins us with not just a first on cnbc interview but another first on cnbc interview. >> hi, andrew. >> phil? >> thanks, andrew. we are joined by mark reuss the president of gm north america joining us from detroit, where in a little bit they're going to be showing the new chevy civil aud dough and gmc sierra. i know we're going to get a bit of a sneak peek first. thanks for joining us this morning. >> thank you very much, phil. it's great to be here. two new trucks. just very exciting. >> we've got a lot to cover. i know you want to give us at least a sneak peek. is this the silverado we're going to show you the front end of? >> i don't want to ruin the surprise for anybody else in pontiac. there are a lot of people here, some show biz here today, too. i am going to give you a little bit of a sneak peek. so here we go.
>> and tell us what stands out here? >> the beginning of the reveal. >> what stands out to you with the redesign? >> i think the redesign, phil, is really, it's a gorgeous truck. this is going to be use ten tashs. it's going to be highly engineered. highly thought out and positioned well from a market standpoint. so this is not going to be the biggest, craziest truck front end. it's going to be a lot of beauty in it. highly engineered from the ground up. new gen 5 with direct injection variable belt timing and our cylinder deactivation. so great fuel economy. but no compromise on the duty cycle to make a living with the truck. and it does it with a lot of beauty. so positioned quite differently in the competition. >> you're obviously optimistic about the chances that it's going to do well in the market, mark. >> i am. >> but let's be honest here. this comes at a time when you guys are really struggling to manage the transition from the current generation of silverado
and sierra to this next generation in the middle of next year. first of all, can you guarantee that these new plodles will be in dealerships by april of next year or by may of next year? because there are a number of dealers i talked with who said we're hearing they might slide back a bit. >> we're not sliding back anything. we're right on track. we're bringing our stamping plants online here. we're bringing our new generation of small block online. so there's no delays at all. rather we're right on track. so i'm not going to guarantee timing here for our competition. it's a very competitive market. so i'm not going to get into guarantees on timing, we're right on track. i don't know what dealers you're talking to, but they obviously haven't really seen our timing schedules, and we're right on track. so no problem with that at all. >> and then the other question becomes, with the current backlog you have 139 day supply of the current models. much more than you want. you doubled the incentives that are being offered out there up
to $2,000 more to move those out of dealerships. it's only been a short time. what kind of response have you seen in terms of starting to clear up that backlog? >> we're off to a great start this month. november was a very tough month for us. we've done very well with the oldest pickup truck in the market for the last year or so. we're now going to have the newest here very shortly. as we sell down, you know, we flat-out were not incenting as hard as the rest of the competition and marketplace. we missed november and calleding the incentive load that we've had. we're now very competitive in the marketplace again and have a great truck out there, still. you're seeing sales pick up in the way that we had hoped. so we're in good shape. our inventory levels by year end we think will be in good shape as we prepare to build a little bit of buffer. we're right on track with that. we think we're in a good place. >> mark, one last question. timing of the new models.
when will they be going into show rooms? spring of next year? early spring? late spring? >> we've got two models here. we've got the gmc and the chevrolet, quite different. we're going to stagger the launches of those across a couple of plants. several plants, actually. and then the stamping plants to go with it. so you'll see there's not one date where we throw the switch and say they're in dealerships and we go. there's rather a staggered overlap of the selldown of the old trucks and the beginning of the new trucks. you'll see this feather in beginning in the spring through summer and then fall. we've got a lot of different models of trucks. we've got the crew cabs, extended cabs. all those trucks that we have to feather in and begin to sell. there's not one date that we're going to throw the switch and we've got the new trucks. you'll see that happening at all the dealerships. >> mark reuss, president of gm america giving us a bit of a sneak peek of the new civil audo and sierra. they're going to be unveiling those a little later on this morning. more throughout the day on a very big day for general motors.
they need to make this launch a success, andrew, and joe. they need to have this be a very successful launch, because this is a critical vehicle for general motors. >> thank you for bringing us that, phil. i thought right at the end there it was almost showing us a little more leg. hiking the skirt a little bit extra there. coming up, breaking economic data. we're going to get jobless claims, ppi and retail sales at 8:30 eastern time. but first, stars are out in force last night to raise money for victims of superstorm sandy. up next we're going to tell you why it was exceptionally satisfying for fans at new jersey rock. tdd#: 1-800-345-2550 let's talk about low-cost investing. tdd#: 1-800-345-2550 at schwab, we're committed to offering you tdd#: 1-800-345-2550 low-cost investment options-- tdd#: 1-800-345-2550 like our exchange traded funds, or etfs tdd#: 1-800-345-2550 which now have the lowest tdd#: 1-800-345-2550 operating expenses tdd#: 1-800-345-2550 in their respective tdd#: 1-800-345-2550 lipper categories. tdd#: 1-800-345-2550 lower than spdr tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 and even lower than vanguard. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 that means with schwab, tdd#: 1-800-345-2550 your portfolio has
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welcome back. a big night at madison square garden and it had nothing to do with the knicks. the 12/12/12 concert for superstorm sandy relief brought together some of the biggest names in rock 'n' roll on one stage. fans got a special treat when bruce springsteen invited jon bon jovi joined him to perform "born to run." springsteen joined bon jovi later for his song "who says you can't go home." the show lasted six hours and said to have reached an audience of 2 billion people around the world. coming up we've got a flood of economic data. we're going to get the closely watched weekly jobless claims plus retail sales and producer price numbers for november as we
we're just seconds away from jobless claims, retail sales and producer price index. steve's got breaking news before this. from the fed? or -- >> yeah. but at 8:30. >> oh, at 8:30. >> 8:29.37. >> so rick doesn't -- >> we need to do two things at once at 8:30. >> who wants to go first? >> i was going to go very short and come back later. this is linear television. >> go before -- you were going to delay the numbers? >> i was going to delay the numbers. >> this is that important. >> i can't say that. i'm just saying this is something. >> there's like fed-style transparency. >> the federal reserve, global central banks acting together to extend the dollar swap lines with the federal reserve. more on the meaning of that when we come back. first rick santelli has the numbers in chicago. >> all right. here we go. november retail sales headline, up 0.3%. that's a little light. most of us were looking up half of one percent.
internals, take out autos. unchanged. take out autos and gasoline. we're up 0.7. that is better than expected. so if we kind of look at this generically, it's not a bad number. it's a little light on headline but close to expectations. subtle revisions last month, nothing new. producer prices. down 0.8. down 0.8% on headline. that's a bigger minus that we're looking for in condemn with some of those import prices we've seen. maybe it's because fiscal cliff has reduced demand. if if we look at ex-food and energy, it's up 0.1 exactly as expected. year over year numbers, up 1.5%. year over year ex-food and energy up 2.2%. the former up 1.5% is definitely a bit light 2.3% our last look. one could argue matches expectations. a little heavier than our last
year over year look which was 2.1. you know if we look at the claims number it's 343,000. that is definitely a very big drop from an upperly advised 372,000. so you know, we're down 29,000 on initial claims. and we're getting back into a zone that we were kind of carving out before superstorm sandy. whether this number is back on track, and around all its distortions of holidays and storms and weather and whatnot, i can't say. but most people around me were shaking their head when they saw it. there's your litany of date to. there's still more to come. you got 170 handle on 10s. a 290 handle on 30s. and it seems like there's some major divergence going on between ten-year and boone which we haven't seen in awhile spread widening. back to you. >> so okay. we're going to -- i mean, you're -- you're pessimistic,
too, about anything good happening. but we can still hope to rise above. but i mean, it's not looking too good. is it? >> well, no. i guess it isn't. i think we're still -- >> i always -- >> i always hope to rise above, though. >> trying to rise above. >> i've been wearing the button. i really like the concept. i guess the problem is, is that i don't know, it seems like the holidays have messed up the politicians' minds, and this may be news to some that, you know, i guess holiday spirits in washington are will 12 months a year. >> so, steve, maybe -- >> maybe i made a mistake. i thought that the market would want to know very briefly about global central bank action before it wanted to know retail sales numbers. news judgment, was that the right call? >> yeah. >> the consumer -- everybody -- but it was swap lines. >> existing -- >> eyes grazed over. >> this is the ability of central banks to use dollars to fund or to pump liquidity into
their markets overseas with dollar-based assets. so deutsche bank can go to the bundesbank and fund paper there using dollars or dollar paper has at the bundesbank because they have a swap line with the federal reserve. they put euros on deposit. the fed puts dollars on deposit there. there's a big issue. is there risk to the central bank? i had an argument with einhorn. i think the federal reserve is protected on this. so that's what happened. canada, england, switzerland, what am i missing? ecb? >> so they didn't -- >> they didn't do another 85 billion? >> no. >> they going to do something every day now? >> if you take off from the story earlier this week about what goes on in basel, this is the new thing that's going on. if you remember the last qe, developing nations were acting against what the fed was doing. there is now a global central bank easing going on. and this is one component of that. i think that's the way to think about it. and i just wanted to say a word
about the retail sales numbers, which are pretty good if you take out the number that goes into gdp. if you look at that number. it was up 0.5%. with some mixed holiday information. merchandise stores down 0.9. department stores down 0.8. but miscellaneous stores where we do internets and cat doings up 1.4%. big drop in gasoline station sales, that's good. do people take the savings and buy sweaters with them? we don't know that. clothing up 0.9%. and vehicles up. >> consumers don't care about this cliff at all. >> we have seen and bernanke mentioned it yesterday, a pretty sharp drop in consumer sentiment. >> sentiment -- >> whether or not that results in less spending is another issue. >> how often is there that big a disconnect, though? >> one of the first front page stories i ever wrote for "the wall street journal" back probably 15 years ago was about the disconnect between sentiment and sales.
>> oh. >> all of a sudden when sentiment drops in the wake of 9/11, people found themselves at auto show rooms. so i was really depressed about what was going on with america. i went out and bought a car. i mean, that was one of the greatest disconnects in the history. >> right. >> you know. actually that was ten years ago. but i've written about that. just one of these vehicles that's out there. and then the claims numbers, i said last week i was reserving judgment at 375. now we're down 343, maybe there's a reason for optimism here. want to be careful that it's not big-time snap back and maybe some expiring ability to get claims. but 343 is below that threshold number we've been in this 350 to 375 range where we said that doesn't matter. that's in the range. 400 we thought was sandy. and now going down below 350 i think some economists, you know what, maybe the job market is a little bit better than we expected. the real disconnect that's out there, andrew, is we've reduced capital spending but not hiring.
>> right. >> usually those things work together when they cut cap-ex they also cut workers to go along with that. they seem to have cut cap-ex on maybe a temporary, i'm worried about the fiscal cliff basis, but kept their employees on board. that seems to be the case right now. and presents the possibility of making some progress. >> they come back with some more cap-ex then we've got a shot -- >> did we get rick to talk about the fed yesterday? time for a -- some wisdom from rick? >> i'm here. >> rick, so what did you make of that? do you understand what policy is now? before you tell me how much you disagree with it, i just want to know if you understand it. >> do you understand it? >> no, i don't. i don't. i wanted to see if we were simpatico on that story. >> you know what steve? i do understand it. ben bernanke is the norm crosby of central bankers. anybody who is younger than
about 40, go google norm crosby and you'll see what i mean. >> i'm older than 40, and i don't get it. help me understand. >> we have to leave a little to the imagination. i'm not showing any more leg on that comment. i want to play an experiment, steve. roughly, what's gdp? >> roughly, 2% economy. >> all right. what's the deficit for the current year that we're measuring gdp? roughly? budget deficit? >> the deficit is going to be a trillion and a little bit of change, right? >> okay. what's the size of our gdp type economy? ? real or nominal? >> either one. >> it's about a 12 trillion dollar real economy. >> okay. what percentage is that deficit 1 trillion to the 12 trillion economy? about 8%? >> 7%, 8%, deficit to gdp. >> so is it fair to say if we have a 2% gdp and a deficit that's 8% that the real economy ask minus 5% to 6% growth. is that accurate?
>> no 73 >> okay. well i want to -- >> can't do that. >> i want to know why. i know we can't. but i have people that e-mail me this all the time. and it's very fascinating, i think they're very smart. there's a little apples to oranges there. but i still think it's interesting. >> it is interesting. we're running very large deficits and not getting the growth to go along with it. >> the transfer payments and all that really artificially boosts gdp. >> but the deficits are shrinking. not fast enough. we were talking about a 9%, 10% deficit. we're at 7%. we need essentially five or six points, rick. we've got to get to two or three too get what they call the sustainable level of the deficit. i think what you're pointing out is that deficit does need to get to a point where it runs in line with the growth of the economy. my point is the guys behind you who you quote a lot and seek to support what they're saying in their words do not seem to support it in their trades. if they're so worried about -- >> that's because they want to
make money. it's like what bob pisani said. this is just what the traders wanted. okay i'm done, you go. >> let me quiz for you for a second. if they were so concerned about this imbalance, which ostensibly is about the inability of the u.s. government to pay its bills, why aren't they selling the very paper they appear to be buying with abandon? >> because they would like to continue to contribute tax revenues to the ever-growing deficit and money. >> need for employee -- >> but agreement to making money are two different things. >> talk to the guys behind you and find out if they so think the u.s. is -- >> -- exchange guys. these are foreign exchange guys. >> get into the other pit there. go take a walk and come back. i don't get it. if they so think we're out of whack why aren't they selling? >> come over here anthony. all right. hold on. i'll translate. give me the question. >> here's the question. >> steve liesman has a question. >> if the u.s. fiscal situation is so out of balance, if the
country is so bankrupt, why isn't he selling paper? why is everybody out there buying by? >> steve liesman wants to know if the country is so horrible, deficits are so bad, why don't you sell more bands? >> why don't i sell more bands? >> traders? >> who's going to buy them? there's the first answer. >> i guess what he's getting at is you don't really believe the country's in bad shape otherwise you'd be selling bonds. there's a guy right now who is actually selling bonds. so maybe we started a trend. >> let's keep talking. >> it's -- >> i won't disagree with your math. and i know your guys behind you agree with your math but your actions speak otherwise. >> debt is not a problem in the short term. the problem is joblessness. >> steve, i like sweet desserts but i can't eat them because all the suits i have won't fit. i think it's kind of the same thing. >> i just buy new suits, man. i don't nope what's wrong with you. >> all right.
>> all right. john mcafee back in the u.s. could be he extradited to belize for questioning in connection with the murder of his neighbor? tomorrow morning at 7:00 a. mchlt the story behind the fed's latest move, dallas fed president richard fisher is going to be our special guest. we've got lots of questions for him. try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do
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deportation from guatemala. joining us now with more on this crazy story about the anti-virus software founder, cnbc's robert frank. robert, tell us. >> hey, andrew. >> what the heck is going on here? >> you're right. it just gets crazier by the day. he arrived in miami last night. he says he has no money, no phone, no contacts, doesn't know what he's going to do with his life. he arrived in miami, staying at some swanky south beach hotel. he was met by federal agents on the plane. he thought they were there to arrest him when those marshals were there to escort him safely to his taxi. so, right now, there is no arrest warrant for him in belize. remember he's just wanted for questioning. he is a person of interest. there is no actual charge or arrest against him in belize. right now there's no reason he would be extradited. the question is can the u.s. officials force him to answer questions to the belize police? unlikely given that he's just wanted for some questioning.
we don't know where he's going to go. my guess is he'll probably wind up in california, new mexico. we don't know how much money he has. he says he has $20 million but it's all in belize. those accounts, he says, are frozen. will be interesting to see. he said some mysterious canadian dropped a wad of $5 bills to him yesterday and that's the money he's living on right now. >> robert, is there a possibility this whole thing has been sort of trumped up in his own mind and that he's almost created his own story by going on twitter and blogging and that this whole thing is like some kind of weird movie? >> there is no question that one of the narratives here is that this is a giant publicity stunt. you know, to what end, that is the question? we have to remember, a man is dead, in belize. it's his neighbors, the guy, mcafee was disputting with, for several months. we have to remember that. but no question this has been a giant media circus. he did just sell the rights to his life story for a movie and a book. >> how much did he get four that? >> we don't know.
but he says the media saved his life here because if we hadn't, he says, the belize police would have taken him in and he says killed him in retribution for not playing political bribes. there's no question this has become more of a media manhunt than a legal manhunt. >> who do you think should play him in the movie? >> that's a good question. i was thinking robert downey jr. if you'd age him a little bit. he would be really good for this. >> yeah, yeah. >> we've got to get someone older and more craggly. there are character actors that look just like this guy. >> this could be a new role for nick nolte. >> mug shot nick nolte. >> perhaps. >> you remember that one? >> you know what? who was the fellow who plays -- pacino. >> pacino does look like -- >> yeah, yeah, yeah. >> who is the actor in the fighter? >> who are they talking about? >> mark wahlberg. >> christian bale. >> he does kind of have that
look. >> pacino. >> does this guy have a history of instability before? >> robert? >> yeah? >> give us the history of us instability. >> well, you know, mcafee, of course, you know, started mcafee the anti-very russ company was worth at one point $100348. went to belize under sort of mysterious circumstances. in 2009 he said he went there because he just wanted to start new companies and belize is a very free government. very few regulations. there were reports that he was making bath salts, methamphetamines, some kind of drug in belize. that was never proven by authorities. >> he said bath salts were like mind expanding or something. >> well, there was somebody posting -- >> and you know. >> -- remember, this is a guy who loved giant, practical jokes, right? he said that this whole heart attack that he had in guatemala last week was a fake. and seems like it was. and he did post on some drug boards that he had started this
new -- he'd founded this new kind of drug that gave you some kind of erotic high, and that, you know, he had created it. and he now says that he was just posing, that was not accurate. many people in belize thought that he was using drugs. you know, they say he looked like he was. he says he's been clean for over 30 years. so that's something that we don't really know. >> okay. robert frank, with the news. >> and we're going to have a little bit more later. so we'll find out the legal situation here in the u.s. once we get to talk to the state department and justice. >> now that he's in the u.s. we should bring him to the set of "squawk." >> we're trying. >> we're trying to do that. >> definitely not beneath us to do that. >> i was serious. >> i know you were. and we -- >> mr. mcafee if you're watching right now, you have an open invitation to the set tomorrow morning. >> nots aa guest. guest host. >> we'll give you two hours. >> coming up jim cramer on the fed's qe cards and stocks to watch ahead of the opening bell.
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jimmy, we had that guy from etrade, who says the individual investor never had a chance, said we had etrade a long time, finally decided, watch cnbc and brought you up, said if you watch mad money, you can even the playing field, even with the big guys. i thought that was, you know, if you watch enough and watch your show, i think you can even do better that the big guys, 'cause you're a lot more nimble, aren't you? >> well, thank you. what are the themes of the show? own apple, okay? apple, how many times i did say it? almost worried people would say i can't take the guy saying own apple anymore. own the big stocks that pay dividends. i mean this has been sensational. i think kids have control their tax situation, individuals can be able to -- if they could control their 401(k), they will do better. joe, you are dead right. the people who continue to come on air and say you can't beat it, are they looking at the s & p, which has done nothing versus individual stocks that we talk about some of which have been fab pure louse? >> like how many times have you said, it bull market somewhere,
make money in a bear market, too. >> look at this morning, cvs reports a great number. we have been saying buy cvs, buy cvs, buy cvs, the drugstores are taking the lion's share of the growth of the consumer. i sit here and say i didn't say buy walmart at 74. the idea that the game against the individual investor is not true. the idea that the individual investor should feel more emboldened to be in stocks, i don't blame them after a facebook. i don't blame them after high-frequency trading. the idea you can't do better than the s & p is ludicrous. that's what i hear over and over again, people i think have a vested interest in keeping nut s & p chains. >> do you think 6 1/2 is the new -- they call it a ner echln ghandi, 85 billion a month forever? >> i think we cut spending, we will be able to stop. people will say, you know what
on their baby to a balance the budget, i want to put my money in the united states, i want to bring jobs to the united states, 'cause they are fiscally responsible and you can stop. without spending cuts, you know something, joe, it doesn't matter. he is just trying to do some stopgap thing. but spending cuts get a deal done. when the president offers spending cuts, we are going to get a deal done. >> all right, jim, thank you. >> thank you. >> we will see ya. okay, coming up, our guest hosts this morn having been joe watkins and matt miller. we will give them the last word when "squawk" returns. >> tomorrow on "squawk box," we will go inside the fed's latest move, an extended interview dallas fed president, richard fisher. quantitative easing, the economy and the fiscal cliff. don't miss "squawk box," starting tomorrow at 6 a.m. eastern. ♪ ♪ [ engine revs ]
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um what is the last word gonna be? >> you know, if you think about what bernanke did yesterday earthquake on everybody's mind, there's something weird in a democracy where we are relying on essentially this one unelected guy with a little unelected institution to try to goose the economy with a tool that's not the right tool to do it. maybe by flooding bank reserves, you know the printing money, get into the economy through some other bunch of things that may not happen. maybe we can do something like raise the minimum wage. want to put money in people's pockets, a boost in demand, how is that? >> the burdenen in congress, got to get this done, sometime running out. anybody worked on capitol hill or the white house, you know how slowly things move. and this deal is going to be structured in two stages, the first dealing with tax rates, the second dealing with the parameters for budget reform and tax reform in 2013 and the tax staff verse to write this legislation and then had the cbo has to have three days to look at t we are running out of time here. >> write the legislation first? >> first en